A consultant is considering submitting detailed bids for two possible contracts. The bid for the first contract costs $100 to prepare, while that for the second contract costs $150 to prepare. If the bid for the first contract is accepted and the work is carried out, a profit of $800 will result. If the bid for the second contract is accepted and the work is carried out, a profit of $1,200 will result. Any costs of bid preparation must be subtracted from these profits. The consultant can, if he wishes, submit bids for both contracts. He does not, how- ever, have the resources to carry out both pieces of work simultaneously. If a bid is sub- mitted and accepted and the consultant is then unable to carry out the work, he counts this as a cost of $200 in lost goodwill. For the decision-making process, there are four possible states of nature: 3: Both bids rejected 32: Bid for the first contract accepted, bid for the second contract rejected s: Bid for the second contract accepted, bid for the first contract rejected Sa: Both bids accepted

(a) The consultant has four possible courses of action. What are they?

(b) Set out the payoff table for this consultant's decision-making problem.

(c) Which action is chosen by the maximin criterion?

(d) Which action is chosen by the minimax regret criterion?